Decided on June 16,2008



A.L. Gehlot, Accountant Member - (1.) THE appeal is filed by the assessee. THE relevant assessment year is 1995-96. THE appeal is directed against the order of the CIT(A)-X dated 23-1-2001. THE appeal arises out of the assessment completed under Section 143(3) of the Income-tax Act, 1961.
(2.) The ground raised by the assessee in this appeal is that the Ld. CIT(A) erred in upholding the action of the Assessing Officer in bringing to tax a sum of Rs. 4,76,400 as capital gains. The brief facts of the case are that the assessee derived income from salaries, dividend etc. During the assessment proceedings, the Assessing Officer noted that the assessee had received a sum of Rs. 80,000 as compensation from the committee constituted by Jai Temple View Co. op. Hsg. Society. The aforesaid amount was not offered to tax by the assessee. The assessee is the member of that housing society.
(3.) THERE is an agreement dated 13-3-1995 between the developer M/s. Hetali Estate and Properties (P.) Ltd., and the members of Jai Temple View Co-op. Hsg. Society. From the agreement, the Assessing Officer noted that the society had given permission to the developer to raise the superstructure on the existing building known as 'Popular Apartments' consisting of not more than 8 flats. The society had also formed a 'compensation committee' which was to ensure compliance of the various terms and conditions of the agreement. On the basis of the terms and conditions of the agreement dated 13-3-1995, the Assessing Officer observed that the assessee was entitled to receive a sum of Rs. 5,80,000 from the said developer. The Assessing Officer did not convince with the contention of the assessee that the amount was not taxable. He was of the view that the amount receivable from the developer was liable to be taxed as capital gain. According to the Assessing Officer the society Jai Temple Co-op. Hsg. Society was the owner of the land and buildings and it permitted the developer to construct the additional two floors. The society through its members had transferred the development rights to the developer for a consideration of Rs. 1,21,00,000 and this was taxable as capital gains in the hands of members. The Assessing Officer arrived at the cost of the right as on 1-4-1981 at Rs. 40,000 and allowed an index cost of Rs. 1,03,600 as deduction from the compensation of Rs. 5,80,000 receivable by the assessee from the developer and taxed the resultant sum of Rs. 4,76,400 as capital gains. The Assessing Officer also observed that the entire act of allowing additional construction had been undertaken by way of an agreement between the members and the developer and this constituted an adventure in the nature of trade.;

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